A Money Coach in Canada

I used to feature case studies on Saturdays. For the next few months, however, I am not working with any clients in order to focus on settling into my new job and my new life up here in Yellowknife.

In lieu, I thought it would be interesting and fun to take questions, and give my thoughts on my Saturday posts. If you have a money question or an issue, please e-mail me at (my first name) AT (your money by design – all one word) DOT commercial (abbreviated). I will take great care in obscuring your identity. Consider it no-charge, lite money-coaching!

This week’s question is from S, from the west coast.

Q: Who would I talk to about when to w/d from my RRSps to help with debt or liquidate assets? or If a 2nd job would be necessary? Is that a debt counselor or an Accountant or a Financial Planner?

A: The first thing to know is there is no real right answer. Obviously, if at all possible, leave your RRSPs intact – so sacrosanct are they, that RRSPs can’t be touched if an individual goes through bankruptcy (with limited exceptions).

Regarding who to talk to, if you have relationships to any professionals you mentioned (Accountant, FP, debt counsellor), by all means have an informal conversation about it. I would also include a money coach in the mix. I have a couple names in your geographic area I can give you (e-mail me). Ultimately, it is always your own judgement call. After getting other people’s ideas and opinions, its time for you to sit down alone with a tea, a pencil and paper, and write out all your options. Take some time (several days, minimum) to let your ideas settle, then make your decision.

Here are a couple of my own thoughts:

Regarding RRSPs / 2nd job:

1. RRSPs Here’s the thing with taking money out of your RRSPs. It will give a measure of immediate relief, and may then free you up to get some financial issues sorted out. But typically, people have a yo-yo relationship with debt (rack it up, panic, pay it down, repeat). It would be a shame to plunder your RRSPs only to find yourself in a similar situation again two or three years down the road. The much harder work, and ultimately more productive work, is to look at the underlying factors that created the issue, and address those.

2. 2nd Job By taking a second job rather than an RRSP withdrawal you accomplish two things: 1. You increase your net worth (extra money to reduce debt, rather than diminishing your assets) and 2. You open more doors for yourself. It could be that the second job would lead to a career that enables you to meet your needs in a way your current career does not. It could connect you to more people who in turn could open more opportunities to you.

Debt comes and it goes, S. Good for you for asking the question and putting yourself in the driver’s seat. Pop by again once you’ve made your decision, and let us know how things play out for you.

Readers: have you ever either taken a second job or used your RRSPs to pay off debt? What was the long term result?

On my way home from the second job I’ve taken for the extra holiday ca$h I need, I stopped at Taco Bell for a quick bite to eat. In my billfold is a $50 bill and a $2 bill. That is all of the cash I have on my person. I figure that with a $2 bill, I can get something to eat and not have to worry about people getting upset at me.

He goes back to his manager who is watching me like I’m going to shoplift, and

IT: “He says I have to take it.”
MG: “Doesn’t he have anything else?”
IT: “Yeah, a fifty. I’ll get it and you can open the safe and get change.”
MG: “I’m not opening the safe with him in here.” [my emp]
IT: “What should I do?”
MG: “Tell him to come back later when he has real money.”
IT: “I can’t tell him that, you tell him.”
MG: “Just tell him.”
IT: “No way, this is weird, I’m going in back.”
The manager approaches me and says

At this point he backs away from me and calls mall security on the phone around the corner. I have two people staring at me from the dining area, and I begin laughing out loud, just for effect. A few minutes later this 45 year oldish guy comes in and says [at the other end of counter, in a whisper]

SG: “Yeah, Mike, what’s up?”
MG: “This guy is trying to give me some [pause] funny money.”
SG: “Really? What?”
MG: “Get this, a two dollar bill.”
SG: “Why would a guy fake a $2 bill?” [incredulous]
MG: “I don’t know? He’s kinda weird. Says the only other thing he has is a fifty.”
SG: “So, the fifty’s fake?”
MG: “No, the $2 is.”
SG: “Why would he fake a $2 bill?”
MG: “I don’t know. Can you talk to him, and get him out of here?”
SG: “Yeah…”
Security guard walks over to me and says

The security guard and I both looked at him like he was an idiot, and it dawned on the guy that he had no clue.

My burrito was free and he threw in a small drink and those cinnamon things, too. Makes me want to get a whole stack of $2 bills just to see what happens when I try to buy stuff. If I got the right group of people, I could probably end up in jail. At least I’d get free food.

Deleveraging: Cutting back on amounts borrowed. For you and me, it means we pay off our visas. For banks, it means paying off short-term debt or converting it into long-term debt (roughly like we’d pay off our visas with our mortgage lines of credit. Roughly). What this means for you and me: Banks have less (borrowed) money to lend out to us. What this means when we do it: I suppose we slow down the economy because we’re not buying as much.

Disinflation: inflation (ie. rising prices) slows down. What this means for you and me: We won’t need as much of a raise to keep our purchasing power the same next year (shh! don’t explain this word to your boss!)

Bottom: The lowest point of an economic cycle. (But you knew that). We keep thinking we’ve hit the bottom, like in Nov. when the S&P hit 752, only to discover the economy can go further down, like this past Friday, when the S&P hit 666. (yes, six-six-six). Naturally, we all now hope this time we really have hit the bottom.

Yellowknife has a population of about 20 thousand. I’ve always maintained it does not have a “small town” mentality – for one thing, it’s fairly transient plus people here travel internationally a lot (anything to get away from -40) plus it’s a fairly educated group of people and a government town.

Nonetheless, you probably won’t go anywhere without bumping into someone you know, if not several people.

This Saturday, while at the local wifi cafe, my boss’s boss came in. Later that afternoon, at the opera (broadcast in the theatre), I bumped into someone else higher up my indirect chain of command.

Both experiences were pleasant enough, but rather startling after Vancouver. Thankfully I was reasonably well dressed (and things are pretty casual here), but it raised questions for me:

In smaller towns/cities what are the social mores about these kinds of incidents? In Vancouver, had I bumped into someone I know, I may have been inclined to ask if they wanted company while having coffee. But when it’s likely to be a common occurrence, like here?

And how do we compartmentalize seeing a coworker picking things over at the legendary dump or discover they are on our new-to-running-training group?

In short, worlds collide here, and I’m not entirely sure to handle it. I’m used to my life being fairly transparent online, but IRL?

Readers: any of you live somewhere where your personal and professional lives intersect all over the place? Is that a good thing or a bad thing? How do you handle it?